Toyota Attributes Doubled Profit to Cost-Cutting Efforts

Toyota Motor Corp.’s annual profit nearly doubled, the auto maker said Thursday, largely because of cost-reduction efforts that overcame lagging sales.

The company said sales suffered from a lack of popular models at a time when rival Honda Motor Co. was reaping strong sales from a new sport-utility vehicle and its Odyssey minivan.

Toyota had to boost advertising to hold sales to a 1% decline.

But the company was able to cut production costs by $1.2 billion by taking steps such as negotiating discounts for parts and using many of the same components in different models. The result was a net profit of $2.4 billion, compared with $1.23 billion the previous year.

Also Thursday, Toyota said it will stop manufacturing the Scepter station wagon at its Georgetown, Ky., plant in June because of slow sales. It will begin preparing for new models, including a minivan scheduled to debut next spring.

After repeated price hikes as the yen strengthened in recent years, the group’s overseas auto sales fell 7.8% to 2.09 million vehicles.

Analysts said the trend is likely to continue this year. “It will be pretty unimpressive both in the U.S and in Europe,” said Chikao Masuzawa of Salomon Bros. Ltd.

For the current fiscal year, Toyota plans $1.02 billion more in cost cuts and expects a $3.7-billion gain from the dollar’s new strength against the yen, Executive Vice President Masami Iwasaki said.

The company also said it expects a rebound in its sales, helped by a recovery in Japanese auto demand and the dollar’s strength. A strong dollar makes Japanese products cheaper overseas.

However, analysts said the company’s sales forecast may be ambitious, considering it has been slow to catch up with the shift in Japanese consumer tastes to sport-utility vehicles.